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Lean Manufacturing in the Automotive Industry (II)

Lean manufacturing has been implemented mainly within the automotive industry. Toyota, which is considered the leader in this area, started using Lean during the 1950s and 1960s. Since then, they have built the reputation of producing cars which are the most flexible and reliable from all.

According to the Toyota WAY book, other manufacturers which have implemented this methodology are:

Toyota Motor Company.

Ford Motor Company.

Chrysler.

Porsche (Volkswagen Group). One of the references in Lean efficiency.

General Motors.

Nowadays, all automotive manufacturers have within their DNA a Lean culture or at least on the process of implementing it, as it is the only way for them of being competitive in a globalised world.

Some benefits, out of many others, about implementing this philosophy are:

Time reduction for the time-to-market product development time-to-market.

Increment of free workshop space due to inventory reduction.

Productivity of machinery increased.

Reduction over the number of suppliers which makes a better and more effective control.

Inventory turns increased.

Lean Manufacturing has been designed so that the whole spectrum of activities/processes/industries could reach the status of world-class companies, particularly, the automotive and electronic sectors are working hard to become lean companies. There are many examples that demonstrate how companies are changing their production methods and management practices to become leaner.

In the mid 80’s, U.S. auto industry was in crisis. It was losing market share against Japanese competitors. The Japanese companies were able to make better quality cars in less time, with more models to choose, more flexibility, with fewer defects, thus, resulting in better customer satisfaction and creating an image of excellence across the world. Toyota, despite the oil crisis of 1973, was able to increase its turnover. At the present moment, Toyota is one of the world’s most impressive automakers that have constantly surpassed their competitors in terms of quality, reliability, cost and delivery. Having said this, that is why, U.S. sent a large group of engineers to Japan to study the Toyota Production System and transfer this knowledge to U.S. companies. This was the beginning of Lean within the United States, which was not long ago.

Many companies in the U.S. and all over the world started in the 80’s pursuing ways of implementing lean in order to boost productivity, reduce costs and increment customer satisfaction.

Manufactures outside Japan started using new Lean tools and shop-floor standards such as JIT, Kanban, SMED, groups of improvement, etc. Despite the power of the previous techniques, companies were not effective in lean implementation as they did not realise at that time that culture and philosophy had to be rooted beforehand. These companies, feeling frustration by their failures when implementing Lean finally realised that the secret Toyota’s success lies in its cultural roots.

Toyota has successfully introduced its TPS (Toyota Production System) all over the world which means that it does not depend on the culture, customs or way of working of the country targeted but on adapting Lean culture to the country’s context.

Companies usually launch projects to implement lean manufacturing in their factories with enthusiasm. One important point is that whenever a company wants to start implementing Lean, the need a Project Leader or Lean Manager that steers and conduct the whole implementation. Usually, they lack a lean start-up guide and methodology that explains how to achieve their objective of a lean manufacturing plant.

The origins of Just-In-Time and Lean Manufacturing

Everything started with Henry Ford (founder of the Ford Motor Company) with the mass production techniques which were introduced, adopted and used by the automotive industry for half a century and to every industrial company in North America and Europe. Currently, mass production techniques (manufacturing for stock, low number of changeovers, low flexibility, low product portfolio), are causing many problems to some western companies to be competitive globally and move ahead to lean manufacturing.

Plenty of companies persist in using mass production techniques, even nowadays. One of the main reasons the biggest three American firms were losing their market share was the loss of competitive advantage as mass production did not allow them to compete with the flexibility and quality of Japanese companies. Besides, Japanese product variations were their competitive opening into world export markets. Having better productivity, they could use the spare time gained on creating new advances such as fuel injection, front-wheel drive or other electronic features.

The start-up of Lean Manufacturing

The American Production and Inventory Control Society (APICS) defines Lean Manufacturing as “A philosophy of production that emphasizes the minimization of the amount of all the resources used in the various activities of the enterprise.” It involves:

Identifying and eliminating non added-value operations.

Employing teams of multi-skilled workers.

Using highly flexible machines.

Let us understand the roots of the Toyota Production System. Toyota started its manufacturing methodology by following the basic principles from Henry Ford. Ford understood the importance of creating a continuous material flow to avoid stoppages and time not adding value to the product, standardizing processes and eliminating waste. Ford produced 11 millions of black T Model and evolved to batch production methods of building up WIP inventory throughout the value chain and pushing each product to the next stage of production, regardless of demand (this is commonly known as the mass production system which is completely opposed to the pull system where production is pulled by customer demand and not the opposite). On the other hand, Toyota did not have space, money but had a wider portfolio compared to Ford, which only offered one type of car. Hence, Toyota developed a flexible system that responded to customer demand and was efficient at the same time.

In the 1970s American industries were starting with the MRP (Materials Requirements Planning), a system of production planning and scheduling. At the same time, the Japanese started to develop a different that resulted in a period of huge economic growth. The manufacturing techniques used by the Japanese at that time were the well-known as just- in-time (JIT). The idea grew up because of Japanese history of living with little space and resource limitations.

Lean Thinking

It focuses on value-added flow and the efficiency of the overall production system (it can also be applied to other sectors such as banking or services in particular). The focus is on the overall system and in synchronizing activities so that they are aligned and producing at a stable pace. Lean manufacturing is a method that shortens the time between the customer orders the product and this product is delivered by the detection and elimination of sources of waste (anything that does not add value to the customer).

In the traditional view of production, the objective was to utilize the full capacity so that more products were manufactured by fewer workers and machinery. The result of this kind of production environment was that products spent most of their time waiting, which is not acceptable when searching for a productivity excellence.